Shivering Isles is the only expansion Oblivion recieved, and Fallout 3 didn't get any expansions. What Fallout 3 got is DLC, Knights of the Nine, horse armor and such were DLC, Shivering Isles was an
expansion, Tribunal and Bloodmoon were expansions. I suppose technically, you could call the DLC for Oblivion and Fallout 3 "expansions", since they add new content to the game, and therefore expand it, but speaking in game terms, what I think of when I hear the word "expansion" is not that, I tend to think of a large addon that adds a fairly large amount of new content. In the terms of a game like the Elder Scrolls, that would mean adding many new locations, populated by new NPCs and monsters, with many new quests and new items. I suppose Point Lookout sort of has that, but I still found it too small to deserve the name of expansion.
Now that we've got that issue cleared up, of course I prefer expansions to DLC, if I had to choose, I'd take one or two large scale expansions along the lines of Tribunal, Bloodmoon or Shivering Isles over small, short addons any day. The former just offers so much more, and even if you have enough addons to last you for the same length of time as a full length expansion, it's still not going to be as satisfying, because since it's all individual, short addons rather than one large whole, you don't have as much time to go so in-depth on the quests and characters added, and there isn't a consistent direction between all of the addons.
Still, it seems pretty obvious that DLC is here to stay, at this point, but that doesn't mean we can't still have expansions as well as DLC. So I hope Bethesda takes the approach they took with Oblivion this time by offering at least one proper expansion along with their DLC, rather than what they did with Fallout 3, because while as a whole, I felt that Fallout 3's DLC had a higher average quality than Oblivion's, in part, perhaps, because even the first DLC to become available for Fallout 3 at least added a new quest, even if it was a pretty linear one and seemed to be trying to be a generic military shooter that just happens to be set in a retrofuturistic world instead of actually trying to offer more of what the game originally offered, whereas in Oblivion, we got horse armor. Nonetheless, even Point Lookout, which is often considered the best of Fallout 3's addons, still just didn't quite do what a full expansion can. The only DLC for Oblivion, aside from Shivering Isles, I'd really consider worthwhile, is probably Knights of the Nine, and even then, I only got it along with the GOTY addition of the game, along with the original game disk and Shivering Isles, I doubt I'd have bought it seperately had it not been included with the GOTY addition.
but several really crappy, really small ones (Area Effect Arrows anyone?), that albeit free, weren't even worth downloading most of the time.
While it's true that the downloadable addons for Morrowind were generally pretty basic at best, I think that's a natural result of them being free. After all, as a business, Bethesda can't afford to invest too much time into designing content they're not going to profit from.